When do furloughs turn into layoffs?

The best business reporting and commentary from around the web

A laid off worker.
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The number of jobs lost since the start of the pandemic hit 39 million this week, said Eric Morath at The Wall Street Jour­nal, and economists and policy­makers are asking how many will come back. A month ago, 88 percent of workers who lost their jobs "called their absences temporary" believing they would be "returning to the same job within six months." But that may be wishful thinking. While some businesses reopen, "restaurants and other small businesses are closing up shop for good," and several national retailers have declared bankruptcy. "Permanent layoffs are more likely at factories as consumer spending declines," and hospitality businesses such as MGM Resorts have darkened their outlook on rehiring furloughed employees. In a survey of 64 economists, most forecast that the jobless rate would remain in the double digits until 2021.

Many industries that are "already under pressure from digital competition will have trouble coming back," said Noah Smith at Bloomberg. Airlines, too, could face permanent disruption if teleworking cuts into business travel, and higher education will never be the same. A recent paper out of the University of Chicago estimates that 40 percent of jobs lost are gone for good, said Samantha Fields and Mitchell Hartman at NPR's Marketplace. Businesses that were sanguine a month ago now foresee a "cataclysmic" recession. "Looking through history at previous recessions," said Stanford economist Nicholas Bloom, one of the co-authors of the paper, "often these temporary layoffs unfortunately turn out to be permanent."

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